MUMBAI: Oil traders are a flummoxed lot these days. Those with years of experience under their belts say they haven't seen the kind of volatility the energy market has been subjected to over the past few months, when trades have backfired or when price movements have just not kept in line with historic trends. The stress, they say, has been so palpable that it's forced some traders to cut back their positions in order not to pull out their hair from their roots. "In my 15 years, I haven't seen prices being driven by news the way they are being now," said a trader with a private refiner. "The way product prices have moved is enough to baffle even the toughest cookie in the business. In the present uncertain environment, the most vulnerable would be those who punt since reading the market has become tougher in the face of uprest in West Asia and north Africa and by the Act of God in Japan all of which have the potential to affect supply-demand," he said, declining to be named since he's not authorised to speak to the press. Among those finding the situation more stressful to handle are directional traders and scalpers - people who enter and exit a counter rapidly to make small gains. "It's been stressful for scalpers who haven't been able to catch a trend," says Hitesh Daga, a trader with exposure to currency futures, equities and commodities like bullion and energy on local exchanges. "When the price moves in a range as it has more recently, how do you take a call a market's going break out of a range eitherside?" he asked. Benchmark WTI crude, which broke out of $92 a barrel on February 21, rose to $106 on March 8 before falling to $97 on March 17 and moving up only to trade in a range between $102 and $104 over the past few days. When a trader feels the market should break out of a range, if he's bullish he'll buy at the support, say, at $102, and if bearish he'll sell at the resistance ($104). "But that's not happening as events are driving the market in and out of the range frequently," said Daga. However, it's not just crude prices that have made it tough for traders to take a call, but the behaviour of spreads (price differences) between refined products like gasoil or diesel and crude oil that have left them in a tizzy. As part of their risk management strategy, oil companies hedge themselves by selling forward products such as diesel and jet fuel on the over-the-counter (OTC) or paper market dominated by investment banks, oil producers and traders. A trader from a government-owned oil refinery said that since mid-January, the fuel oil spread - the price difference between a barrel of fuel oil and that of crude oil - has fluctuated from -$10 to -$5 to -$10, the gasoil spread has gyrated between $15 and $23-24 and jet fuel has mirrored the move.

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